Moneycontrol :2024 Pro Panorama | Is the banking party finally over?
India’s listed banks have reported stellar growth in profits quarter after quarter for the past four years. Most bank chiefs have indicated a healthy outlook for FY25 too, albeit acknowledging the pressure on margins and the fight for deposits.
But shares of banks have been big underperformers when compared to the broad market indices. The Nifty has gained roughly 25 percent over the past one year, but the banking index has crawled about 10 percent. This is despite public sector banks notching historic gains on the back of record improvement in their return ratios. Indeed, the Nifty PSU Bank index has clocked a colossal 79 percent gain.
The culprits are private sector banks. Once the apple of investors’ eyes, private sector lenders have become laggards in almost all metrics. Emkay Global’s head of research Seshadri Sen brings out this trend in a report aptly titled “Waiting for Godot: the elusive turnaround”. Sen points out that private sector banks are “ex-growth” and no longer belong in the growth stocks group. These lenders face headwinds in revenues, profits and even book value per share over the next one year.
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